The Russian Ministry of Finance has published an official letter, which clarifies that if a Foreign Nominee Holder discloses a Russian legal entity as the entitled investor of income from Russian bonds, the respective Russian custodian will not be obliged to withhold the relevant tax and will instead transfer the interest income amount in full. In this case, the Russian legal entity will have to calculate and pay the due tax to the local budget on its own.
The Ministry of Finance at the same time confirmed the tax agency obligations of Russian custodians with respect to dividends paid to Russian legal entities and individuals and coupons paid to Russian individuals, as underlying clients of Foreign Nominee Holders.
Impact on investors: Russian legal entities, underlying clients of Foreign Nominee Holders, are obliged to calculate and pay to the local budget the taxes on the received income from Russian bonds on their own.